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Building A House To Live In Is No Investment – Financial Advisor
 
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12-Jan-2018  
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Contrary to popular perception that building a house is a lifetime investment one should make, an Investment Banker and Financial Advisor, Abena Amoah, noted that such a house is only a utility and not an investment.

Abena Amoah stated that a house becomes an investment only when it is rented out to tenants for occupation.

Speaking on Joy FM yesterday, the financial advisor cum stockbroker said only a house that makes its owner money through rentals can be called an investment. – is an investment.

She noted that since a house cannot generate income until it is rented out, living in it only makes it a utility.

“It is a utility because you need shelter and it needs maintenance. So having one house is not an investment. If you have one house to live in and you’re able to build five other things that are able to generate rent for you where if you fall on hard times you are able to sell one of them, then that other one is an investment, not the one you live in,” she explained.

She was contributing to a discussion on personal finance and investment with sit-in host Daniel Dadzie.

Answering a question from a listener who prefers to invest his money in expensive and luxury clothing, Abena Amoah says spending money on expensive clothing and other luxury items is also not an investment.

She said investments are deliberate processes of buying and later selling an item for profit, therefore anything that does not give you more money after it is sold cannot be said to be an investment.

“So if you buy yourself an expensive shirt at a $100 and you step out, there should be someone out there – about 200 people – who are willing to buy that shirt off you for $150… so if there is only one person you can hoodwink into buying the shirt for $150 then that is not an investment,” she said.

“There is nothing like investing in expensive clothing, he is just buying expensive clothing because he likes to see wardrobe full of expensive clothing,” she said.

She, however, noted that there are certain circumstances where certain items can be turned into investment products.

Citing American Comedian Jay Leno, who is known to have the largest collection of rare cars, Ms Amoah said that can be said to be an investment.

“Because he is able to trade in them, they are insured, car companies go to and buy it off him…so you can take a car as a commodity as an investment product because it has certain characteristics to it.

”If your life is to flash and have people being envious of you, yes, it makes you feel good, but that is not an investment,” she added.

The CEO of BJ Global and Antal International, Janice Tagoe who also contributed to the discussion said spending money on expensive clothing, cars and other luxuries is not an investment.

She said until one has invested in various platforms, there should not be a desire to put money into cars and luxury clothing because then it will not be an investment, but rather an expenditure.

For her, even individuals who earn high incomes should not resort to spending their money on luxury cars or clothing until they have invested part of the money.

She said there is the need for the individuals to ensure that their expenditure does not exceed their income and at all times, they should ensure that part of their money is put into investments.

These monies when they mature can then be used for these luxury items and others.

“So the desire for them is not bad, but the application in terms of what you use your money to do in terms of luxury products needs serious consideration,” she noted.

 
 
 
Source: today
 
 

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COMMENTS




Name: Osei
A house in which you live in is an investment papa. Even if the house does not appreciate in value, the amount of rent you will be saving over a lifetime is very significant. Plus it gives you peace of mind. You don't have to conjure up big money at the end of every 2 year period. And rent rates go up astronomically too. Just think about 2 years rent advance and you will know what I am talking about.
 
Name: NKM
I agree with all the those who have commented so far because the building appreciate values as well as the land the building sits on and also the owner can save the rent he/she should have paid and invest elsewhere. For example, a land opposite my house is now going for about GHC35,000.00 but i bout my some years back at GHC1,200.00 so it appreciates value and can be classified as investment.
 
Name: Building a house
This financial advisor paaa abon. Does she understand the simple saying a house is an asset and not a liability? It is an asset because houses and the land they are built on don't lose value but rather increase in value.
 
Name: K
Thanks JoeD. Again if you build a house and you leave in it it surely is a form of investment because the rent you are supposed to be paying to a landlord can be saved for other things or for other investments. So like JoeD said, this advise dea we take it with a pinch of salted koobi.
 
Name: JoeD
i disagree with the financial advisor..the analogy of closet full of clothes and a house as a primary residence not being an investments is comparing apples and oranges. let just assume the above as a variable and fixed assets. When the house is sold, there is the likelihood of making more than was spent on building it and that is "profit", whereas the clothes lose value once its worn and "depreciates" physically thereby making it cheaper than purchase price, so a "loss". another reason a residential property is an investment is the absence of rent payment, that can be used to make more money.
 



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